TCS Provisions from 01 October 2020

The Finance Act, 2020 has inserted TCS Provisions of

Section 206C(1G)(a) – TCS on foreign remittance through Liberalised Remittance Scheme (LRS)

Section 206C(1G)(b) – TCS on selling of overseas tour package and

Section 206C(1H) – TCS on sale of any goods [except goods on which TCS applicable as per Section 206C (1), 206C (1F) and 206C (1G)].

However, there are various doubts which people are facing regarding implementation of these sections. For the convenience of the industry, here is a detailed guide on the same.

Due to the COVID-19 pandemic, all these amended provisions of TCS will be effective from 1st October, 2020 instead of 1st April, 2020.

1. Section 206C(1G)(a) – TCS on foreign remittance through Liberalised Remittance Scheme (LRS)

  • An authorised dealer receiving an amount or an aggregate of amounts of Rs. 7,00,000 or more in a financial year for remittance out of India under the LRS of RBI, shall be liable to collect TCS, if he receives sum in excess of said amount from a buyer being a person remitting such amount out of India, at the rate of 5%.
  • In non-PAN/Aadhaar cases the rate shall be 10%.
  • This section will not be applicable in following cases:
    • If the buyer is liable to deduct TDS under any other provisions and has made deduction.
    • If a buyer is CG, SG, an embassy, a high commission, a legation, a commission, a consulate, the trade representation of a foreign state, a local authority or any other person as notified by CG.
  • “authorised dealer” is proposed to be defined to mean a person authorised by the Reserve Bank of India under sub-section (1) of section 10 of Foreign Exchange Management Act, 1999 to deal in foreign exchange or foreign security.

2. Section 206C(1G)(b) – TCS on selling of overseas tour package

  • A seller of an overseas tour program package who receives any amount from any buyer, being a person who purchases such package, shall be liable to collect TCS at the rate of 5%.
  • In non-PAN/ Aadhaar cases the rate shall be 10%.
  • There is no monetary limit for this transaction, irrespective of any amount TCS must be collected by seller of that package
  • This section will not be applicable in following cases:
    • If the buyer is liable to deduct TDS under any other provisions and has deducted
    • If a buyer is CG, SG, an embassy, a high commission, a legation, a commission, a consulate, the trade representation of a foreign state, a local authority or any other person as notified by CG
  • “Overseas tour program package” is proposed to be defined to mean any tour package which offers visit to a country or countries or territory or territories outside India and includes expenses for travel or hotel stay or boarding or lodging or any other expense of similar nature or in relation thereto.

3. Section 206C(1H) – TCS on sale of any goods [except goods on which TCS applicable as per Section 206C (1), 206C (1F) and 206C (1G)]

  • A seller of goods is liable to collect TCS at the rate of 0.1% on consideration received from a buyer in a previous year in excess of Rs. 50,00,000.
  • In non-PAN/ Aadhaar cases the rate shall be 1%.
  • Only those sellers whose total sales, gross receipts or turnover from the business carried on by it exceed Rs. 10,00,00,000 during the financial year immediately preceding the financial year, shall be liable to collect such TCS.
  • Central Government may notify person, subject to conditions contained in such notification, who shall not be liable to collect such TCS.
  • No TCS is to be collected from the Central Government, a State Government and an embassy, a High Commission, legation, commission, consulate, the trade representation of a foreign State, a local authority as defined in Explanation to clause (20) of section 10 or any other person as the Central Government may, by notification in the Official Gazette, specify for this purpose, subject to conditions as prescribed in such notification.
  • No such TCS is to be collected, if the seller is liable to collect TCS under other provision of section 206C such as Section 206C (1), 206C (1F) and 206C (1G) or the buyer is liable to deduct TDS under any provision of the Act and has deducted such amount

Completed various post qualification courses hosted by Institute of Chartered Accountants of India (ICAI) such as  Information Systems Audit (DISA)  Concurrent Audit of Banks  Goods & Services Tax  Blockchain and other emerging technologies  Primarily handling Indirect Taxation vertical with focus on GST.  Proficient in handling litigation in legacy taxes such as MVAT & CST upto Maharashtra Sales Tax Tribunal stage.  Inventory audit of listed companies throughout various locations in Maharashtra.  Management consultancy and Tax planning services.  Advisory and consultancy to Startups on cash flow management, funding sources  Retirement and Inheritance planning, Estate management consultancy.  Experience in Capital gain taxation and tax planning  Specialization in E-commerce retail segment  Risk advisory  Bank Concurrent Audit Experience